How to Reduce Payment Fraud and Chargebacks in Emerging Markets

Fraud is a tax on growth. The faster you expand into new markets, the more exposed you are to payment fraud and the chargebacks that follow — and emerging markets bring their own twists, including rails that have no chargeback mechanism at all. This guide lays out the 2026 threat picture and the practical controls that reduce losses without strangling good sales.

The threat picture in 2026

Payment fraud remains a large and shifting problem. Global payment-card fraud losses ran to roughly $33.4 billion in 2024 by the Nilson Report's count, and broader estimates of e-commerce fraud losses reach into the tens of billions annually, with forecasts rising over the rest of the decade. The bulk of online fraud is card-not-present (CNP) fraud — exactly the kind e-commerce merchants face.

At the same time, AML enforcement has intensified globally, so fraud and compliance can no longer be treated as separate back-office concerns.

Understand your two cost centers

Merchants pay for fraud twice:

1. Direct fraud loss — goods or services delivered against a payment that turns out to be fraudulent.
2. Chargebacks — when a cardholder disputes a transaction, you can lose the sale, the goods, and a fee, plus damage to your chargeback ratio (which, if too high, can threaten your ability to process at all).

There is also a hidden third cost: false declines, where over-aggressive fraud rules reject good customers. In emerging markets, where some legitimate behavior looks "unusual" to naive models, false declines can cost more than fraud itself.

The emerging-market twist: instant rails have no chargebacks

This is crucial and often missed. Account-to-account instant rails like Pix in Brazil, UPI in India and Raast in Pakistan do not have card-style chargebacks. Once a payment is made, it is effectively final.

That changes your strategy in two ways:

• Pre-transaction screening becomes more important, because there is no post-hoc dispute mechanism to claw back a clearly fraudulent payment.
• Refund and dispute handling shifts to you and the rails' native flows (for example Pix Devolução), so clear refund policies and responsive support reduce both fraud-adjacent abuse and customer frustration.

Meanwhile, scams that trick legitimate users into authorizing payments (authorized push-payment fraud) are a growing concern on instant rails, calling for user-facing safeguards and anomaly detection.

The control stack that works

No single tool stops fraud; layered controls do. The effective stack includes:

• 3-D Secure 2 for card payments, applied intelligently. Modern 3DS2 lets the large majority of transactions through frictionlessly while challenging only risky ones — and it can shift liability for fraud on authenticated transactions. The goal is targeted challenges, not blanket friction.
• Device and behavioral signals — device fingerprinting, velocity checks, and behavioral patterns that flag anomalies.
• Risk scoring that combines signals into an approve / review / decline decision, tuned per market so that normal local behavior is not penalized.
• Network tokens and good data hygiene, which improve both security and acceptance.
• Manual review for the genuinely ambiguous middle, kept small by good scoring.

Note that fraud tools common in mature markets — like address verification (AVS) — work poorly or not at all in many emerging markets, so don't lean on controls that the local ecosystem doesn't support.

Don't forget cash on delivery

In markets where COD persists, the "fraud" looks different: failed deliveries, fake orders and high return rates rather than stolen cards. Mitigations include order verification (a quick confirmation step), risk-scoring COD orders, and incentivizing prepaid digital payment to shift volume off COD entirely.

Balance protection with acceptance

The hardest part of fraud strategy is that the dial which reduces fraud also reduces good sales if you turn it too far. Treat fraud and acceptance as one optimization, not two. Measure fraud rate, chargeback ratio and false-decline rate together, and tune toward the best total outcome.

This is another reason merchants run risk through their orchestration layer: it can apply screening and 3DS where they help, keep data consistent, and balance risk against acceptance from one place. A platform like PiqPay includes fraud and risk tooling alongside its routing and acceptance features, so protection and conversion are managed together rather than fighting each other.

A practical checklist

• Apply 3DS2 intelligently — challenge risky transactions, not all.
• Layer device, velocity and behavioral signals into risk scoring.
• Tune rules per market to avoid false declines on normal local behavior.
• For instant rails, invest in pre-transaction screening and clean refund flows.
• Manage COD risk with verification and prepaid incentives.
• Monitor fraud, chargebacks and false declines together.

Fraud will never be zero. The goal is to make it small and predictable while keeping the door wide open for the customers you actually want.

This article is general information, not legal or compliance advice. Want fraud tooling built into your payments stack? Talk to PiqPay.